The British government has begun the process of distributing £325 million to small and medium-sized businesses through its UK Innovation Investment Fund (UKIIF).

Focused on life sciences, digital and advanced manufacturing businesses, the fund is seen as critical to supporting new companies at a time when private venture capital investment has been failing among UK technology companies. Dow Jones figures shows that fund-raising among technology-related firms in Britain has dropped from 210 deals in 2005 to around 90 announced for this year.

The UKIIF is being managed by the European Investment Fund, which is is owned by the European Investment Bank and the European Commission. It matched the UK government’s £100 million contribution to the fund.

Announced by Gordon Brown, the prime minister, in June 2009 as part of the government’s strategy for Building Britain’s Future, it was officially touted as critical in supporting skilled jobs by investing in businesses where there are significant global opportunities. Initially £200 million was set aside for the fund but in January a further £125 million will be invested in low carbon and clean tech sectors. Hermes Private Equity will be running the clean tech part of the fund.

Designed as a fund-of-funds, the initial sums are expected to be distributed to companies over the next five years with a long-term view of rising over £1 billion for the UKIIF over 15 years.

6 Comments

KatM

“Focused on life sciences, digital and advanced manufacturing businesses, the fund is seen as critical to supporting new companies at a time when private venture capital investment has been failing among UK technology companies.”

Based on this, what I really want to know is why is no one investing in UK technology companies? Moreover, you’re obviously correct in saying this, when you think that according to the Monevator blog:
“…venture capitalists want to put more money into technology investment, after parting with a mere $14 billion in 2009, compared to $36 billion in 2007…Venture capitalists make most of their money on initial public offerings of the tech companies they invest in. But in each of the last two years, fewer than 10 companies have gone public, compared with 86 in 2007.”http://monevator.com/2010/01/05/investing-in-technology/
$14 billion still seems like an incredible amount of money, but in terms of not only investment, but also investment in technology, an area that benefits practically every industry in existence, and then it just seems ridiculous not to invest.
Especially when you think that technology practically makes the world, in the 21st Century, go round, with the internet, more advanced mobile phones, and machines that can practically do everything bar making your morning coffee!
I also wonder if the lack of investment is the reason why so few technology companies have gone public, compared to previous years.
Technology is definitely the key to our future, as more and more individuals and businesses rely on it. So I would really love to know why venture capitalists aren’t investing, and why are we having to rely on the Government to do it instead?

“Venture capitalists are critically important for starting new innovations and getting businesses incubated. But what hasn’t happened to date is getting large-scale capital to help bring those businesses to commercial scale.We need the policies and financial mechanisms to turn early start-up companies into global powerhouses.”

So, I’ll have to say that I agree with Kat on this subject. Venture capitalists are crucial when it comes to development of start-up companies, but we also need to know that current economy doesn’t allow experimenting with big investments. The link above tells us about USA, but current economical trends in USA and Europe are quite similar. Today, many developed companies do not have enough financial power to survive, so they heavily rely on Governments, so there’s even bigger problem for start-ups. Simply said, can new business models create a profitable company without Government intervention?

Though this article specifically mentions Government support for businesses in England, is it typical of how governments support businesses. I wonder how easy is it to apply for this type of funding or what are the requirements to be eligible for this type of funding.

My company have developed a database of innovative tenants operating on science parks.

A few points
1) The UK economy needs the innovation economy to help map the future for the UK. We see decline in manufacturing, a significant recent decline in property, challenges in the finance markets, so we do need something else
2) Our academic standing is comparative to anywhere else in the world and therefore the outcomes when commercialised are potentially very exciting for the UK
3) The recent decline in IPO’s in innovation is clearly one of the impediments to VC’s engaging, therfore necessitating govt involvement.
4) We were surpised how few (comparatively) genuinely innovative companies at early stage exist in the UK Economomy.
5) My biggest worry is that as with anything managed through public sector bureaucracy the fund will go to those best at bid writing rather than those most likely to expand from their start up

My company has developed game changing new technology in voltage optimisation. Which is a big problem for distributors and end users alike.
Our innovation has global potential because the problem exists in every country.
Despite wild claims, nobody has effected a solution.
We have a working prototype and plans for domestic and commercial models which can reduce the need for power generation significantly and offer potentially massive profits by way of a share in the savings.

We’ve funded the prototype work and testing, but having spent all our available personal money, have found that no form of funding now exists without match funding.
So…this leads you to think that only people with money have good sound ideas???